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QUEST MEANS BUSINESS

U.S. Stocks Get A Jobs Market Boost As Payroll Numbers Beat Expectations; Google Looks To Compete In The Wearables Market With A $2 Billion Acquisition; China Launches World's Largest 5G Network; Trump Defiant After Impeachment Probe Vote; Maria Fire Swells To 3,500 Hectares In California; U.K.'s Nigel Farage Urges Prime Minister Johnson To Join "Leave Alliance". Aired 3-4p ET

Aired November 1, 2019 - 15:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


[15:00:12]

ELENI GIOKOS, CNN INTERNATIONAL HOST: It is the final hour of trading on Wall Street and stocks are closing out the week at all-time highs. As you

can see the Dow is up one percent. That's 250 points to the good, and it's all about the job number euphoria. And of course, those are the markets

and these are the reasons why.

U.S. stocks get a jobs market boost as payroll numbers beat expectations.

Banks in Lebanon reopened after weeks of protests, but the economy remains on the brink.

And fighting fit. Google looks to compete in the wearables market with a $2 billion acquisition.

Live from the world financial capital, New York City. It's Friday, November 1st. I'm Eleni Giokos in for Richard Quest, this is QUEST MEANS

BUSINESS.

All right, a very good evening to you and tonight, stocks hit record highs as new numbers paint contrasting picture of the U.S. economy. First, an

unexpectedly strong jobs reports, the U.S. added 128,000 jobs in October. The figures for previous months were revised higher as well and employment

rose slightly, but that was due to more Americans entering the labor force market to look for work.

Less rosy though, the state of American manufacturing is getting hit by a global slowdown. U.S. factory activity slowed for the third month in a

row.

On the index though, any number below 50 is a contraction. Clare Sebastian is with me now to dig into the numbers. I mean, looking at what we saw --

128,000 versus expectations. I mean, it's really a big difference. Why was there such a discrepancy?

CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Well, so what we saw -- what people were expecting was that there would be a bigger drag from the

General Motors strike than there actually was. Now in the end, it costs the economy about 42,000 jobs that was the amount lost in terms of the auto

sector and auto parts.

But I think we can take a look at that manufacturing as a whole. That overall was down just 36,000 jobs in the quarter, a big drop if you look by

historical standards, but it does show the number that 36,000 is less than 42,000, but that was partially offset.

So that was -- we also saw gains in sectors like food services and drinking places. That shows that the consumers are still spending, 48,000 jobs were

added there.

Healthcare continues to be strong, social assistance, financial activity, so the economy was able to weather that temporary factor of the GM strike

better than expected.

GIOKOS: Yes, that's incredible. But I mean, at the end of the day, are these numbers sustainable and that's what everyone wants to know? It's a

good barometer. We are also looking at wage growth. Look at how many people are entering the jobs market. What are we reading into the latest

numbers?

SEBASTIAN: Wage growth is always interesting because that has consistently failed to keep pace with what people would expect for an economy that has

an unemployment level at generational lows. We've ticked up slightly in this this month to 3.6 percent. But that as you say was because more

people started looking for work.

But 3.5 percent is a very strong jobs market and wage growth was only at three percent year-on-year, so that is consistently below what people were

thinking it would be that the employers should now be incentivizing people to join the workforce.

So that's a bit of a problem, perhaps partly due to the fact that those big additions came in food services that tends to be lower paid jobs. So

perhaps something to read into that.

GIOKOS: So quality jobs really do matter.

SEBASTIAN: Right.

GIOKOS: I know you've also been looking at the monthly averages versus what we saw last year. Where do we stand on that?

SEBASTIAN: We're still significantly below last year -- 167,000 is the monthly average for this year. Last year, we were seeing really stellar

gains in the job market, 223,000 was the monthly average.

But I will say for the last three months now with the revisions that we saw today, the average was 176,000. So things are starting to look a little --

a little better than people were anticipating.

I think the Federal Reserve is saying this week, you know the labor market is still strong. They are going to hold off on more cuts. Perhaps they

knew something we didn't know about.

GIOKOS: So I guess we are getting into this kind of close to the Christmas season, right? It's so close. Of course, it's November. What kind of

trends do we see over this period that people could be pricing in?

SEBASTIAN: Well, I think we are expecting shopping to still be strong. You see the consumer is still very much the bright spot of the economy. Of

course, that is the biggest contributor over all, about 70 percent of GDP.

I know the National Retail Federation is expecting a slightly higher level of spending this year than last year. But there are still key variables

here.

Of course, the Fed says that it needs to see something material that would affect its outlook. We've got the ISM numbers today. They were still

pretty weak. That could be something that continues to trickle through, if we didn't get a trade deal and of course leading into the holiday season,

we've still got those tariffs that could come in on December 15th on consumer goods. That is still on the table until the U.S. and China put

pen to paper.

GIOKOS: Thank you very much. Clare Sebastian. All right, so investors are putting more weight on the strong job reports rather than weak

manufacturing data.

The S&P and the NASDAQ both had records early in the day. Better than expected earnings are helping as well. At the New York Stock Exchange, the

President of Seaport Securities, Ted Weisberg told me traders are optimistic.

[15:05:10]

(BEGIN VIDEO CLIP)

TED WEISBERG, PRESIDENT, SEAPORT SECURITIES: In general, the numbers have been just fine. Listen, not every number is going to be great and there

are going to be glitches. But overall, I mean, we have a stock market that is trading at all time or near all-time highs, in spite of all the negative

sentiment, all the stuff about the economy is coming off a cliff and the economy slowing and this is happening.

You know, there's no question there are signs of slowing. But at the end of the day, the U.S. economy is still the best economy in the world and

it's not Nirvana every day.

You know, things ebb and flow. This tariff thing is a real problem. And I think that clearly is having a negative impact on some of the manufacturing

sectors.

Now maybe, you know, this push to get interest rates lower, maybe it's the Fed just trying to get ahead of the curve. I mean, we don't know.

(END VIDEO CLIP)

GIOKOS: All right. So you've got to also look at the long term trends, but the current economic environment tells us the story. So when you take

a look at stocks, they're hitting record highs and President Trump is touting the strength of the economy as well.

But then you also have the likes of the Fed cutting rates. So that generally is not a sign of strong economic health. So stocks are showing a

really good sign in terms of where the economy is going, and remember, it's always very forward looking.

The likes of the jobs environments, as well is telling us a very good story, as well. And of course, the overall GDP number came through at just

1.9 percent.

So it's not what President Trump promised, but it's better than many other countries. So that's pretty much good to neutral as well.

So let's move that slightly over, and then of course, we know manufacturing activity slowed in October, but again, not as much as we saw in the likes

of September, but that definitely goes towards bad because it's still contracting.

And then you've got consumer confidence. It fell in October. Now, Americans are concerned about the outlook for businesses and jobs as well,

and remember, we also have to see what they do in terms of spending over the holiday season.

But that definitely is heading towards neutral to bad. So here to tell us a little bit more in terms of whether the American consumer has a bit more

confidence left in it, and we have a bit more steam in the U.S. economy. You've got Anthony Chan, former Chief Economist for JPMorgan Chase. Great

to have you with us.

Lots of economic data to go through this week, looking at the numbers, are you feeling confident that we're on the right track? And even in this

environment, should the Fed have been cutting rates? I guess, that's one of the big debates also.

ANTHONY CHAN, FORMER CHIEF ECONOMIST, JPMORGAN CHASE: I think the Fed was trying to be preemptive. They said it was a mid-cycle adjustment, and

that's what it was. And that's the reason why when we get to December, there's almost no justification for another rate cut at this juncture.

But when I look at employment being so strong, we know that consumer confidence is closely related to employment trends. So with employment

trends being as good as they are, it really doesn't take much to assume that consumer confidence will in fact end up catching up and picking up

from here.

CHAN: Absolutely. Okay, so looking at the jobs numbers -- 128,000 jobs created in the month of October, far better than people had anticipated it.

Can we stay on this trend where we will see these kind of numbers coming in month-on-month?

CHASE: It's a little challenging because the 128 is misleading in itself. We know that there were strikers that were taken out of the payroll number.

That's why the Household Survey gave you employment, which doesn't adjust for strikers where employment actually rose by 241,000.

And in fact, most people assume that the government census would have added 10,000 to 15,000. We didn't -- we didn't see that. We actually saw a loss

of jobs, so this number is actually understated.

And then the real big party blaster was the upward revision in the prior two months -- 95,000. You've got to add all that stuff up to really get an

idea of what the underlying trend is, and it's close to 300,000. It's about 285,000 is the way I estimate it.

No, we can't continue this indefinitely. Especially because we're at the late stages of this economic expansion.

GIOKOS: Okay, so 1.9 percent, you know, growth, it is not what President Trump had promised and we know he is coming out and saying, look, this is

the greatest economy ever, but he is also kind of going interventionist on the Fed saying we could be doing more, we could be stimulating a lot more.

What are you reading into this?

CHAN: Well, I think anybody in the White House -- Democrat or Republican - - want to have a strong economy going into an election. And so if the Federal Reserve cuts, that's adding more juice, more sugar high to the

overall economy, and the economy does a little bit better.

You've even heard some discussion about potentially cutting taxes, anything to stimulate the economy going into the election. But right now, I think

the economy is in a good place. I agree with Chairman Powell and the Federal Reserve. It is not doing too bad.

GIOKOS: So let's talk about the kind of words he was using. He was saying it's appropriate for the current economic environment, but they will adjust

and they will reassess should things change.

If we start to see a bigger slow down, you know down the line where economic growth remains below two percent, and even we've heard talk of

possible recessions. Do you think that there is a possibility that we left the door open for another race?

[15:10:06]

CHAN: Well, I have no doubt they did. But I don't think at this point, if you ask anybody on the Federal Reserve, they're probably thinking sometime

in the second half of 2020. If somehow economic activity slows down, then they will do it.

But over the near term, I think that right now, everyone at the Federal Reserve, or most people at the Fed, are of the mindset that the economy is

doing okay, and there's no reason to intervene.

GIOKOS: But you're not pricing in a recessionary type environment or further slowdown?

CHAN: I think that when I see these kinds of employment gains, I think we're safe for the next six to nine months, and we don't have to worry

about a recession. Beyond that, of course, we still don't know what's going on with the trade tensions.

Of course, today, we had a call between the U.S. and the Chinese, and we got different messages from both sides. But if you really try to

homogenize both messages, it does suggest that they're trying very hard to reach some sort of a truce, and guess what a truce means, it means a boost

to business sentiment, and perhaps a boost to business spending, which was the Achilles heel of the real GDP number in the third quarter.

GIOKOS: Fantastic. So great to have you in studio with me. Much appreciated for your time. All right, so Google is getting its steps in

today. It's spending more than $2 billion to try and catch up with Apple in the wearables market.

And the global fight for 5G heats up, China launches the world's largest network. Don't go anywhere.

(COMMERCIAL BREAK)

GIOKOS: So it's a six-mile jog from Google headquarters in Mountain View California to Apple's campus in Cupertino. That's around 15,000 steps.

Remember to get your 10,000 in for the day.

And now Google is making one of its largest ever acquisitions hoping to catch up with its rival when it comes to fitness trackers. And of course

it's a deal worth $2.1 billion. Google will buy Fitbit, the maker of smart watches that measures exercise of course.

And if you take a look at where it stands in terms of the price, Fitbit has been struggling ever since it went public and Google is buying it at a more

than 60 percent discount compared to Fitbit's 2015 IPO price.

And this is a race against Apple and Apple has a significant lead. Earlier this week, CEO Tim Cook reported his wearables division grew 54 percent

last quarter, and is now the same size as the entire Mac computer business. We've got Paul La Monica joining us now and I know he is an elevator guy.

PAUL LA MONICA, CNN BUSINESS REPORTER: In this building, of course, yes.

GIOKOS: In this buildings, wow.

LA MONICA: I'll take my steps elsewhere.

[09:15:05]

GIOKOS: Yes. I take the stairs. But good to see you.

LA MONICA: Here we go.

GIOKOS: Sixty percent discount. That's pretty incredible and we saw Fitbit's share price actually doing quite well today. So clearly investors

in the markets are liking this number.

LA MONICA: Yes, they like the deal and it was expected, the rumor of this leaked earlier in the week. Fitbit stock popped on that. So I think the

question now is going to be can Google bring enough to Fitbit to help gain market share back because we've seen that Fitbit in addition to its stock

price, its market share hasn't been fantastic over the past couple of years.

You've got obviously Apple, as you pointed out with the Apple Watch, but competition also from Samsung and some of the Chinese companies as well,

Xiaomi and Huawei also make smart watches.

GIOKOS: Okay, so getting into such a competitive environment and of course Fitbit is more sort of the health element. Apple Watches gives you both,

you know, kind of being able to communicate and the health element as well, what do you think Google is going to want to do with it?

LA MONICA: Yes, I think there are -- there's a lot of potential here, Eleni, for what Google could do. Google, for example, owns Waze, the

popular mapping app. So is there a way to integrate Waze into the smart watches for better directions if you're walking around? If you're running?

Could you possibly have things that are a part of Google's Verily Life Sciences Division to become part of a health focus -- a health focused

watch from Fitbit. Verily has actually been working on a wearable device to track things like EKG already. So that's an angle that they could go

at, then obviously, because of Google and it's pixel phones, you could marry the pixel with the Fitbit and have like kind of Uber wearable device.

GIOKOS: I just -- I'm looking at the trends here and you're seeing Apple TV Plus being launched, and they're trying to capitalize on all the devices

that we have. And then you've got Google trying to get into the hardware space as well in terms of wearables, and it seems that you know, there's

going to be such a lot of competition, it is like, what products can I get if I buy this specific brand with these wearables? How do you -- you know,

how do you see this competitive environment kind of playing out?

LA MONICA: Yes, it's going to be hyper competitive. I think for Google, what's going to be interesting is that Apple is in an arguably better spot

because Apple sells an Apple Watch that runs on its iOS operating system. They're not licensing it to anyone else. They don't have to worry about

pleasing other vendors.

Google has now with Fitbit, a manufacturer but also there are other companies running Android for their wearable devices. So now all of a

sudden you're competing with the likes of Samsung, which is of course, a big partner for Android as well.

GIOKOS: Fantastic, Paul. Thank you very much. Good to have you on the show. All right, so China is spearheading the race to lead the next

generation of mobile technology launching the world's largest 5G network on Friday.

The service is available in 50 cities including Beijing and Shanghai for $18.00 a month through state-run telecom operators. The U.S. and South

Korea already launched 5G in limited areas a little earlier this year.

We've got Rana Foroohar joining us now. She is an associate editor at "The Financial Times," and a CNN global economic analyst. This is pretty big

news. Because it's interesting, the scale part of this, I mean, getting superfast internet onto the fingertips of a lot of Chinese consumers. What

is the economic play here? Because we keep hearing how 5G can transform economies? How is this going to help China?

RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: Well, it's a very big deal, and as you say, scale is always in the equation when you're talking about

China.

China is really already, I would say, the world's hub for mobile innovation. You've got more people owning mobile phones than anywhere else

in the world. You've got more people using smartphone apps. And I think that rolling out 5G is only going to increase that.

In fact, it's something that a lot of policymakers and CEOs in both the U.S. and Europe are really fretting about that if China jumps so far ahead

as an innovator in this area, what's going to be left for everyone else?

What's also interesting is this is happening at a time when we have, you know, a splinter net, the idea of the U.S., Europe and China going

fundamentally different ways in terms of the rules of the road for the digital economy.

So you may see China really kind of ring fencing, this area. 5G is also an important part of the One Belt One Road infrastructure program in which

China is building out 5G infrastructure throughout the Old Silk Road and even into Europe, with countries like Italy and Greece coming on board with

that.

So this is a big foreign policy program as well as an economic impact.

GIOKOS: Yes, and this is very interesting, because I'm looking at the companies that are involved in rolling out 5G because you've got to

remember that the infrastructure that's needed to upgrade these base stations, you know, it's a lot of base stations. I think it's about 12,000

that they trying to work on at the moment.

But you've got Nokia, you've got Ericsson as well, and Huawei plays a really large and big role here. Tell me about the strategy where they are

even using these companies to get into other territories as well.

[15:20:04]

FOROOHAR: Well, absolutely, and you've just mentioned Huawei. Of course, Huawei has been a major player in the U.S.-China tech and trade war.

There's been a square off between Huawei and Qualcomm, which is the U.S. 5G chip maker innovator.

You may see countries in Europe, for example, and emerging markets in Africa and parts of the Middle East, being forced at some stage to say,

okay, are we going to go with Huawei or are we going to go with Qualcomm?

And that has, again, not just economic impacts, but geopolitical impacts, because 5G is going to be the operating system for your life. It's going

to be what everything operates on not just at the consumer level, but with the Internet of Things, smart equipment, you know, rolling out into the

industrial internet. This is really a big turning point.

GIOKOS: Yes, absolutely. And actually, just interestingly, South Africa and Lesotho have launched 5G using Huawei, so a conversation that needs to

continue.

FOROOHAR: There you go.

GIOKOS: Thank you, Rana, we will be speaking to you a little later in the show.

So British Prime Minister Boris Johnson is defending his Brexit deal after U.S. President Trump criticized it when he called into a London radio show

saying it will hamper trade between the two countries. Listen in.

(BEGIN VIDEO CLIP)

DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: We want to do trade with U.K. and they want to do trade with us. And to be honest with you, this

deal under certain aspects of the deal, you can't do it.

(END VIDEO CLIP)

GIOKOS: Well, Downing Street says the Prime Minister's Brexit deal would give the U.K. control over who it trades with and how. We've got Paul

Black in London with us. Phil, how significant is it when you've got the President of the United States weighing in, in terms of what he thinks

should happen in terms of the deal, whether it's good or not?

PHIL BLACK, CNN INTERNATIONAL CORRESPONDENT: It's pretty extraordinary, Eleni, and it's been really an extraordinary 24 hours since as you saw

there President Trump phoned in to the talk show of the Brexit Party leader, Nigel Farage.

He kicked Boris Johnson's E.U. deal and also suggested that Farage and Johnson should team up to become an unstoppable political force. The

timing is important because earlier today we then saw Farage launch the Brexit Party's campaign for the coming general election in this country.

And Farage was speaking to a very similar script, kicking Johnson's deal suggesting a formal pact between his Brexit Party and the Prime Minister's

Conservative Party.

And he said, if you do that, ditch the deal, team up with us, form a leave alliance. We will get a big majority, make Brexit happen quickly. But

there's a thread attached or else he said, if you don't do that, then the Brexit Party will contest every seat in the country, stealing many of

Johnson's votes, and making the job of getting that big parliamentary majority to get Brexit done so much harder.

Now late today, Johnson, first of all, pushed aside any possibility of a pact with Farage, so that's been dealt with. And on top of that, he said

simply that Trump was wrong in criticism of his Brexit deal, because he says under the terms of the deal, Britain will be free to do trade deals

with any country in the world.

And so, now, the volatility of this election campaign enters a new phase and Farage will have to decide if he is going to carry on with his threat,

risk splitting the Brexit vote, perhaps ultimately risk a government that could stop Brexit from happening altogether.

It's just another one of the reasons why this election campaign is so volatile and predictable and no one is saying with any certainty that they

know what the result is going to be.

GIOKOS: All right. Thank you very much, Phil. Appreciate it. All right, so Wall Street's least favorite candidate to replace Donald Trump has

published details of a healthcare plan.

Elizabeth Warren estimates it will cost around $20 trillion in the next decade to provide coverage for everyone. She says that as President, she

would pay for it in large part by ramping up taxes on corporations and billionaires.

CNN Senior Writer, Tami Luhby is following the story for us and Rana Foroohar is still with us as well. What an incredible story and coming up

with this number and the big question is, is it sustainable? We've seen examples around the world where, you know, blanket healthcare basically

isn't. And the big question, who is going to pay for it?

Let's go with you, Rana, looking at the top lines here. Is she doing the right thing or she threatening her run as President?

FOROOHAR: Well, it's a very interesting question. If I were to say economically, is she doing the right thing over the midterm? I would have

to say, yes, she is. If you look at other countries, nationalized healthcare plans actually ultimately cost less as a percentage of GDP and

have better outcomes.

Is she doing the right thing politically? That's another question because the U.S. has always had a very different structure for its healthcare

system than say Europe.

A lot of people, even Democrats would have liked to have seen a public option with say a private plan laid on top of it like what you see in the

U.K., for example, that would have been easier to sell.

[15:25:04]

FOROOHAR: But Warren is making a big bet here. I think that she is betting on the fact that we are at a tipping point in the U.S., where

millennials are ready for this kind of socialized medicine for a healthcare system that looks a lot more like Europe.

She is going for the people who may be wanting to vote for Bernie Sanders. Is she going to be successful? I think it will tell us a lot about this

political moment in the U.S.

GIOKOS: Okay, so Tami, Goldman Sachs came out with an interesting number and they said that if this plan and deal does go through, the tax plan will

cut S&P 500 earnings by 11 percent.

Give us the nuts and bolts of her proposition with regards to healthcare and how it could impact the sentiment towards her.

TAMI LUHBY, CNN SENIOR WRITER: Well, it certainly would hit Wall Street large companies and billionaires which are her favorite targets. She wants

to increase taxes on financial firms. She wants to increase taxes on large corporations. She wants to increase her wealth tax.

She already has a wealth tax that she would use to pay for education and childcare. Now, she wants to add another three cents on every dollar to

have billionaires pay even more. And what's more, she wants to beef up the IRS to make sure that those billionaires are paying their fair share.

Now, she gets money from other places as well. She wants states to continue paying what they're paying now for Medicaid and CHIP, another

program that we have here, and she wants employers under the --

you know, the Sanders plan would actually -- it says that states and employers really don't have to pay any more in healthcare insurance

premiums. It would all go to the Federal government, but under Warren's plans, states would continue to pay and employers would continue to pay,

but instead of paying their premiums to insurers, they would be paying it to the Federal government, so this keeps, you know, a lot more of the tax

burden on financial firms and companies.

GIOKOS: Okay, Tami, do you think that she is taking a really big risk here heading into the 2020 elections?

LUHBY: Yes, I mean a lot. She is going to be hit hard, and she already has been by former Vice President Joe Biden that this plan says that it's

not going to raise taxes on the middle class, but that she really has a lot of unreasonable and, you know, unworkable assumptions in here.

One of the assumptions she has, for instance, is that the healthcare costs are only going to grow at the size of GDP. But that's not even happening

in countries with socialized medicine -- with socialized programs. So she's at risk for a lot of attacks here from her rivals.

GIOKOS: Absolutely. It's just a huge cost. Thank you very much to both of you for your insights.

OK, so next in Lebanon, some normalcy returns for the first time since the country descended into political chaos and economic crisis. Coming up

after this.

(COMMERCIAL BREAK)

[15:30:00]

GIOKOS: Hello, I'm Eleni Giokos, there's more QUEST MEANS BUSINESS in just a moment. When we'll be in Lebanon where banks have reopened after weeks

of protests. And as England and South Africa prepare to meet in the Rugby World Cup final, we'll hear from a tech company cashing in on the action.

Before that, the headlines this hour. U.S. President Donald Trump insists he's done nothing wrong despite Thursday's votes in the House of

Representatives formalizing the impeachment investigation. A new "Washington Post"-"ABC News" poll shows 49 percent of Americans in favor of

removing Mr. Trump from office and 47 percent opposed.

The latest fire to hit the state of California has quickly exploded to at least 3,500 hectares. More than 500 firefighters are battling the Maria

fire in Ventura County. It's just one of 14 major wildfires burning across the state. Weather conditions are improving, but red flag warnings are

still in effect.

Nigel Farage is kicking off the Brexit Party's campaign before the U.K. election next month. He's urging Boris Johnson to drop his deal with the

EU and join a so-called leave alliance with his party. Johnson has rejected Farage's offer. Farage has threatened to field candidates across

the country, something analysts warn could hurt the Conservative Party.

ISIS is claiming responsibility for its first terror attack since confirming the death of Abu Bakr al-Baghdadi. Iraq's joint operations

command says ISIS militants attacked an army checkpoint in a town around 60 kilometers north of Baghdad. One soldier was killed and five others

wounded by small arms fire and two IEDs.

Reports say more than 260 people have been killed in Iraq since anti- government protests began nearly a month ago. The figure comes from the independent High Commission for Human Rights of Iraq. A spokesman says

12,000 people have been wounded in the demonstrations.

People in Lebanon are again able to take their money out of ATMs. Banks across the country re-opened for the first time in two weeks after mass

protests paralyzed the country and forced the Prime Minister to resign. Hezbollah leader Hassan Nasrallah says the next government must heed the

people's demands and restore confidence. Ben Wedeman is in Beirut.

(BEGIN VIDEOTAPE)

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Lebanon's banks reopened for the first time Friday after being closed for two weeks. There

were more customers than usual, but there's no apparent panic, no run on the banks. The Central Bank didn't place any currency limits, but left it

up to individual banks to set limits on withdraws and transfers.

It wasn't the Black Friday that some feared the Lebanese lira did not fall dramatically against the dollar, yet, the fundamentals of the Lebanese

economy remain very shaky. It has the world's third highest debt-to-GDP ratio, half of government revenues go to pay interest on loans and the

country is heavily dependent on imports.

Speaking for the first time since the resignation of Prime Minister Saad Hariri, Hezbollah Secretary-General Hassan Nasrallah said that the new

government should regain the trust of the people through accountability and transparency. Some Hezbollah supporters were accused of attacking

protesters.

Now Lebanon's squabbling politicians are in talks on the formation of a new government. There is no clear idea, however, when that might actually

happen. Ben Wedeman, CNN, Beirut.

(END VIDEOTAPE)

[15:35:00]

GIOKOS: Well, experts say the Lebanese economy has spiraled into its worst crisis since the civil war, which ended in 1990. Government debt amounts

to around 150 percent of annual GDP, the third highest in the world, and the cost of borrowing has soared. The two-year bond yield jumping to more

than 30 percent.

Now, the Lebanese pound's value is pegged to the dollar. But the government could come under pressure to devalue it. We've got Nasser Saidi

served as Lebanon's Minister of Economy and Trade, and was also the Vice Governor of the Central Bank. He joins me now from Dubai. Thank you very

much, sir, for joining us, really good to have you on the show.

But looking at these debt levels, looking at the fact that you take this view to close banks, it creates panic. And the Central Bank governor

earlier this week told CNN, we're days away from economic collapse. Are these the right messages to be sending at this time when the economy is on

the brink?

NASSER SAIDI, FORMER MINISTER OF ECONOMY & TRADE, LEBANON: Well, the point right now is to regain confidence and trust as Ben Wedeman was talking.

You need to send the right messages, and the Central Bank needs to extend liquidity to the banking system at this time. The closure of the banks

over the past two weeks did not instill confidence, and that's why people will withdraw cash.

There are now informal capital controls --

GIOKOS: Yes --

SAIDI: There's a parallel market or a black market in foreign exchange. What needs to happen now is really confidence-building measures, and

particular bringing in a new government that will correct the path we're on.

GIOKOS: Yes, so that when you mentioned the black markets in terms of the currency, we always see this in economies that peg the dollar, peg the

currency against the U.S. dollar because essentially, it's not a real value in terms of what you're seeing on the ground. Should the Lebanese

government take the pain now --

SAIDI: That's right --

GIOKOS: And just devalue instead of bringing down their foreign currency reserves, which puts the country in even more economic difficulty?

SAIDI: No, I don't think it's judicious to de-peg now. What you need to do is undertake fiscal reform, structural reforms and then you might

reconsider the peg. If you just de-peg now, it runs the risk that for one 40 percent of government debt is in foreign currency, the banks themselves

have foreign currency obligations as does the corporate sector.

And that would mean the government itself would probably not be able to finance its interest and its foreign debt. So, what you want to do is make

the adjustment in other areas and then reconsider the peg.

GIOKOS: Yes, OK, Mr. Saidi, but you're talking about providing liquidity for the banks. Does the Lebanese government have money to be able to do

that, and if it doesn't, where can it get it from?

SAIDI: No, this has to be done by the Central Bank. When you peg your currency to the dollar as is the case of Lebanon, you have to use your

international reserves.

International reserves have been falling while the Central Bank still does have the ability. However, that is limited in time, and I think now is the

moment where we now want to start thinking about maybe an IMF program --

GIOKOS: Yes --

SAIDI: A stabilization fund, a series of reform measures for Lebanon.

GIOKOS: OK, it's interesting that IMF, we know would come in and help if they know that government is committed to creating change. Right now, we

have a power vacuum, how do you see that playing out?

SAIDI: Well, I think there's now, consensus that you cannot continue with business as usual. The degree of corruption that we've had in Lebanon, the

large budget deficit which have accumulated into a large foreign and domestic debt cannot continue, that's an unsustainable path. And the

politicians realize that they've now reached the end of the road, and they're now willing to move.

What's being discussed now in Lebanon is a new government that would be partly politician, but mainly experts taking on --

GIOKOS: Yes --

SAIDI: The main core portfolios like economy, finance, public works, electricity, water, energy and the like. You need that really to restore

confidence.

GIOKOS: But the --

SAIDI: And that will just be the first step along a long road.

GIOKOS: We're talking about sectarian politics here, that is the big concern, it's just who is going to be in charge. And you're talking about

that these foreign currency reserves are not going to last forever. It is a race against time, isn't it?

SAIDI: It is absolutely a race against time, and that's why you need to form a government as quickly as possible. I call it a Harakiri government

by which I mean that whoever takes position in that cabinet is willing to sacrifice their political future. I know of no governments really in the

world that survive what we call the J-curve where you introduce austerity reforms.

[15:40:00]

You restructure government, you take a number of hard and painful measures, no politician usually --

GIOKOS: Yes --

SAIDI: Survives that.

GIOKOS: Very quickly. Were you surprised that this revolution is on the go, when it started?

SAIDI: No, because it's an accumulation of three types of crisis.

GIOKOS: Yes --

SAIDI: There's a political and governance crisis associated with corruption. There's an environmental crisis because of lack of attention

to the environment --

GIOKOS: Yes --

SAIDI: And water and health pollution, and then you've got an economic, financial and fiscal crisis. Those three crisis came together at the same

time which is why you see people in the streets --

GIOKOS: Yes --

SAIDI: The misery index in Lebanon has gone up.

GIOKOS: And thank you very much, so good to really have you on the show, much appreciated for your insights, sir --

SAIDI: OK --

GIOKOS: Nasser Saidi, the former Economy Minister in Lebanon. All right, so, Saturday is game day. England and South Africa battle for glory in the

Rugby World Cup final. You know who I am supporting -- all right, we'll take a look at how businesses claiming a piece of the action up next.

(COMMERCIAL BREAK)

GIOKOS: All right, so exciting times and we're less than a day away from the biggest events in sports, the Rugby World Cup final and a repeat of

2007, South Africa will battle England to take home the Webb Ellis trophy. This time, Japan is hosting, the first Asian country to do so.

And as you can see here, fans have been turning out in the droves and just spot the green there, a couple of South African fans as well. Many of them

even when the typhoon Hagibis earlier in the competition as well. So, it's been a crazy few weeks.

The BOLT is a sports and TV highlights app, it's also one of the tournament's official media partners, CEO Jamal Hassim joins me now live

from London. And fantastic to have you with us, first things first, who are you supporting?

JAMAL HASSIM, CHIEF EXECUTIVE OFFICER & FOUNDER, BOLT GLOBAL: Great rugby. I think it's going to be an amazing --

GIOKOS: Oh, come on --

HASSIM: Spectacle. So --

GIOKOS: All right, we got that out the way. OK, so, I mean, it's --

HASSIM: Yes --

GIOKOS: Incredible what you're doing because you're focusing on giving access to people that are unbanked essentially. But you're using FinTech

to try and get highlights to people around the world. Tell me how important it is to be able to tap into this market.

[15:45:00]

HASSIM: Well, you know, I think you know, start with our mission to begin with. Our whole reason for existence is about bringing information,

entertainment and news essentially to the masses, for whom access to information is very limited at present --

GIOKOS: Yes --

HASSIM: And the other reason I think for our existence is not just about bringing that great content to the masses, it's about rewarding the viewing

experience as well. So, for instance, in the case of the Rugby World Cup that's on right now, with the users that are viewing our content on our

platform, we actually reward them with our tokens as well.

GIOKOS: Yes --

HASSIM: The BOLT and the peg as tokens. The idea is, you know, to uplift their lives as well, in addition of course --

GIOKOS: Yes --

HASSIM: Enriching their lives with the information and content that we're bringing to them.

GIOKOS: So, leading up to the Rugby World Cup final now, have you seen an increase in the amount of demand there, you know, for your product at the

moment?

HASSIM: Yes, I think what's been totally amazing has been you know, we are lined with world rugby in the sense that we see viewership extending to

countries and viewers in countries which traditionally have not been rugby- loving nations. For instance, in south Asia, north Africa, Nigeria, in West Africa as well. So, that's been the most interesting development for

us that we've seen in the last couple of weeks.

GIOKOS: And you've also been official media partner. What does that actually mean and how were you able to capitalize on the love of sports

and, you know, bringing people to your screens?

HASSIM: Yes, I think, you know, first and foremost, we love tempo moments like the Rugby World Cup, right? Because you know, it's not just about

bringing sport. It's about you know, sharing the spirit of endeavor, that sports garners, right? The will, the human will to succeed --

GIOKOS: How profitable is this final going to be for you? Can you give me a number?

HASSIM: I think the viewership numbers are through the roof already.

GIOKOS: Yes --

HASSIM: I wouldn't put it in terms of, you know, financial figures. I think, you know, we're pleased just with the viewership alone. And it's

not just about us, I think, you know, it's about the rewards from our tokens that are going back to our viewers as well, and how it's been

changing the lives of the people following the competition on BOLT.

GIOKOS: All right, fantastic, really good to have you on the show, and I'm hoping that you're going to support South Africa by the way. I've got my

own intention here, I'm sure you can hear it from the accent, great to have you --

HASSIM: Why not?

GIOKOS: On the show, really good. All right, so --

HASSIM: Why not? All the best.

GIOKOS: Thanks. So, E-sports is expected to become a billion-dollar industry this year with some experts estimating that video game is around

the world number in the billions as the industry gross across the Middle East. Anna Stewart takes a look at one of the region's largest gaming

festivals.

(BEGIN VIDEOTAPE)

ANNA STEWART, CNN REPORTER (voice-over): In the 40 years since Pac-Man first shot across our screens, the gaming industry has stepped out of the

arcades and into this. Gaming has become a multi-billion-dollar global phenomenon.

UNIDENTIFIED MALE: This is not a small industry, it's a massive industry and it's only going to get bigger, you know. I mean, there's companies

pulling out of the Super Bowl now and putting their money into E-sports and gaming. That tells you something, isn't it? It's incredible. Goldman

Sachs are investing in it, Merrill Lynch are investing in it, so, it's here to stay for sure.

STEWART: Insomnia; an annual gaming festival is in Dubai for the first time, exploring one of the fastest growing regions in the gaming industry.

UNIDENTIFIED MALE: We saw that there was a gap in the market. The gamers were here, there's no question about that. Massive gaming -- one of the

fastest growing gaming industries in the world, actually.

STEWART: What was once a world for geeks and nerds is now about big business, corporate sponsors and lots of money, and the players are cashing

in.

UNIDENTIFIED MALE: Yes, we actually won a lot of money, to mention, we're happy with it.

(WORLD SPORTS)

STEWART: Earlier this year, 16-year-old American Kyle Giersdorf made headlines when he won $3 million in a Fortnite tournament.

UNIDENTIFIED MALE: The young guy won $3 million, but that was only the final winner. The total prize promised $30 million. Imagine that.

STEWART: But it's not just the prize money, gaming has become a path way to careers in programming, software design and engineering.

[15:50:00]

UNIDENTIFIED MALE: They can make money in the gaming industry, a lot of money in the gaming industry. But they may choose a different path, and

this industry, they can take to green gaming now. And it's a fast track for some of the biggest jobs in the world now. I mean, Google is hiring

from the gaming industry.

STEWART: Most of these teenagers aren't worried about their future right now. They're living in the moment and watching as their childhood hobby

transforms into a money-making opportunity. Anna Stewart, CNN.

(END VIDEOTAPE)

GIOKOS: All right, so when we return, Apple's bid -- Apple bids rather for a slice of the streaming market. How its new service stacks up against

Netflix, Hulu as well as Amazon, stay with us.

(COMMERCIAL BREAK)

GIOKOS: Welcome back. So, Apple is aiming to take a bite out of the streaming scene. Its service, Apple TV Plus is now available in more than

100 countries for $4.99 a month. Apple has reportedly spent $6 billion on content to compete with Netflix, Hulu and Amazon.

Oprah Winfrey, Jennifer Aniston and Reese Witherspoon are just some of the stars who've signed up to appear in exclusive offerings for Apple. Frank

Pallotta is here with me.

FRANK PALLOTTA, CNN BUSINESS MEDIA WRITER: Hello --

GIOKOS: The streaming strategies is Apple going to be able to come out kind of on top here. There are so many options for consumers.

PALLOTTA: Yes, but there -- like we talk about the streaming war a lot, we talk about how everyone is competing with everyone else. Netflix

necessarily isn't competing with Apple. Apple isn't necessarily competing with Disney Plus. They're not all competing with each other. What Apple

is really trying to do here is not necessarily grow a huge amount of subscribers. They want to do that, they need to do it.

GIOKOS: Yes --

PALLOTTA: But what they're really trying to do is give you something to use on your device. This Apple for the last, you know, 10, 15 years has

been about selling you iPhones. The next era of Apple might be about selling new products that you can use --

GIOKOS: Yes --

PALLOTTA: On your iPhone.

GIOKOS: And the thing is, I mean, you've got iTunes, you've got podcasts that they're getting --

PALLOTTA: Yes --

GIOKOS: Growing really big on. Do you think that they're going to bundle everything together?

PALLOTTA: I think --

GIOKOS: For $4.99 --

PALLOTTA: I think --

GIOKOS: Because that's really -- I mean it's really cheap. I've bought coffee that was more expensive than that here in New York. I mean, it's

crazy.

PALLOTTA: I think services is where they're really going. Services has become their big kind of push. And I would not be shocked if you look at

the bundling of all of these services together. Apple Music, Apple Arcade, the videogame service and Apple TV as kind of like the crown jewel of those

services.

[15:55:00]

GIOKOS: Yes, and they're capitalizing on the fact that a lot of people have iPhones --

PALLOTTA: Yes, I mean --

GIOKOS: And watches --

PALLOTTA: Over about 1.4 billion people use an IOS device, that's more than a billion people audience.

GIOKOS: So, if you can get $5 from each of those people, well, you know, I mean, do the math, right? But the thing is content. That -- I mean, at the

end of the day, they definitely don't have a really big library.

PALLOTTA: I know --

GIOKOS: Do they need to buy a library? Do they need to think about how they're going to be creating content?

PALLOTTA: I mean, we need to -- Apple needs to start thinking about how they're going to go forward in terms of the content. Right now, they don't

have the type of content library that Netflix have. Netflix is everything for everyone. Disney is the biggest franchise that you've ever heard of

from "Star Wars" to Marvel to "National Geographic".

Apple is star-studded. Jennifer Aniston, Oprah, Steven Spielberg, J.J. Abrams, other people like that are going to be working with Apple in the

future.

GIOKOS: Oh, all those streaming services banking on the fact that people will have more than one, you know, service that they'll be signed up to.

PALLOTTA: So, studies have shown that people want about four streaming services, and they want to spend about $42 for streaming services. So, the

prices don't really match up --

GIOKOS: Yes --

PALLOTTA: But it's not necessarily a streaming war, it's more of a streaming Olympic. It's about --

GIOKOS: All right --

PALLOTTA: Trying to get on the metal round. Like it's trying to get a seat at the table. Not one of these -- I mean, look at all of these

prices, you've got $4.99 for Apple TV Plus, $6.99, $8.99, all of those prices when bundled together, it's going to cost you around $70. That is -

-

GIOKOS: Right --

PALLOTTA: That's the ton of money and we're not even considering Peacock, which is "NBC Universal's" product, and the cost of Broadband which allows

you to even use these products.

GIOKOS: Good point, really good to see you, thanks so much.

PALLOTTA: Thank you for having me.

GIOKOS: Fantastic. So, there are just moments left to trade on Wall Street, we'll have the final numbers and the closing bell right after this,

stay with us.

(COMMERCIAL BREAK)

GIOKOS: All right, moments away from the close of Wall Street, and as you can see, record highs S&P and NASDAQ sitting up today and you know, hitting

those new records because of the euphoria coming through on the jobs report as well. Dow is up 1 percent.

Quickly, let's take a look at some of the biggest movers on Wall Street today. We have Caterpillar up almost 5 percent, Chevron and ExxonMobil up,

as results basically sitting flat, but Exxon got a really nice boost towards the end of the day, up 3 percent. But what a week it's been, we

even had an interest rate cut and lots of earnings out as well.

Thanks so very much for joining us. I'm Eleni Giokos, this is QUEST MEANS BUSINESS. We've got "THE LEAD" with Jake Tapper next.

(BELL RINGING)

END